Contract: contents, exemption clauses Flashcards
How are contract terms classified?
CONDITIONS: major term going to root of contract,
Breach : termination + damages
INNOMINATE (aka. Intermediate): Cant be classified at the outset as there’s such a wide spectrum of breaches. ‘Wait and see’ and if the effect of a breach of the term is to deprive the innocent party of substantially the whole benefit it was anticipated he should receive under the contact
WARRANTIES: Minor, breach=damages only
How to determine if term is a condition or warranty?
Objective: Would a reasonable person think the parties intended the term to be a condition or a warranty?
Types of contract term
Express: Written/oral terms specifically agreed by the parties
Implied
How can express terms be incorporated into contracts?
- Signature (inc tick box)
- Reasonable notice before/at time of contract
- Previous consistent course of dealing
How can express terms be incorporated via signature (+exceptions)?
If contract signed (inc. tick box) then terms part of contract
EXCEPT where exception clause is :
a) illegible
b) Contents of doc misrepresented
c) Unusual and onerous and not fairly or reasonably drawn to attention of other party
How can express terms be incorporated via reasonable notice?
Must be reasonable steps been taken to bring the clause to the other parties notice before/at time of contract
CONSIDER:
Is doc contractual in nature
If unusual/onerous, have extra lengths been taken to bring to notice?
Legible?
Position of clause-hidden/ small print
Timing-have reasonable steps been taken to bring to notice before contract finalised?
How can express terms be incorporated via consistent course of dealing?
Must be a sufficient number of regular dealings in consistent format
Eg. Not for’3/4 times over 5 years but yes for 3/4times a month for 3 years
in what ways can items be implied into contracts?
- By courts: By custom
- By courts: In fact
- By courts: In law
- By statute
When are/aren’t terms implied by custom?
Reflecting well-known and legally binding customs of the trade
UNLESS express term contradicts
When are terms implied in fact?
Where contract would be unworkable without relevant term
Ie. not expressly inc bc its so obvious it goes without saying
When are terms implied in law?
Bc law regards it as necessary for a particular type of contract
Eg employment contracts=implied duty to provide health, safe environ
What statues imply terms and into which type of contract?
Consumer Rights Act 2015: sale of goods/services B2C
Sale of Goods Act 1979: Sale of goods, B2B
Supply of Goods and Services Act 1982: Services, work, materials, B2B
What terms does the Consumer Rights Act 2015 imply?
- Goods must comply with their description where sold/supplied in course of business
- Goods must be fit for purpose where purpose made known and where sold/supplied in course of business
- Where sale of goods by description, goods will correspond with that description
- Seller has right to sell/transfer goods
Goods must be of satisfactory quality - Where work/service done in course of business, must be done with reasonable care and skill
6.If not agreed, reasonable reasonable price - Where work/service done in course of business and not agreed, reasonable time
CRA 2015: which terms are strict liability
Satisfactory quality
Fit for purpose
CRA 2015: effect of breach of reasonable care and skill?
Consumer has right to repeat performance
CRA 2015: effect of breach of reasonable time
consumer has right to appropriate price reduction
CRA 2015: effect of breach of ss9-11 (satisfactory quality, fit for purpose, comply with description)
- Short term right to Reject & refund & damages(if costs more to get elsewhere)
(non perishables: 30d bought/delivery
perishables-as long as goods reasonably expected to last) - Repair/replacement
- Price reduction/reject and partial refund to reflect use
CRA 2015: burden of proof for breach of ss9-11(satisfactory quality, fit for purpose, comply with description)
if buyer can prove was defective within 6mo, presumed goods defective when purchased
What terms are implied by the sale of goods act 1979?
- Seller has right to sell
- where sale of goods by description, goods correspond with description
- Goods are of satisfactory quality
- Where purpose known, goods fit for purpose
SGA 1979: when will goods be considered to be of satisfactory quality?
If they meet the standard a reasonable person would regard as satisfactory, taking into account any description of the goods, price (if relevant) and all other relevant circumstances
What type of terms are all the terms implied by the SGA 1979?
Conditions
Strict liability
Effect of breach of terms implied by SGA 1979?
Buyer can reject goods unless…
1. Buyer accepted goods-intimated acceptance or kept goods beyond reasonable time without seeking to reject them
2. S13/14 (description/satisfactory qual)- breach is so slight it would be unreasonable to reject goods
What terms are implied by the supply of goods and services act 1982?
- . Seller has right to transfer goods
- Where supply of goods by description, goods correspond with description
- Where supplied in course of business, goods must be of satisfactory quality
- Goods must be fit for purpose where purpose made known and where sold/supplied in course of business
- Where work/service done in course of business, must be done with reasonable care and skill
6.If not agreed, reasonable reasonable price - Where work/service done in course of business, reasonable time
In the SGSA 1982, which terms are conditions and which are innominate terms?
CONDITIONS:
right to sell
comply with description
satisfactory quality
fit for purpose
INNOMINATE
reasonable care/skill
reasonable time/price
In the SGSA 1982, which terms are not strict liability
reasonable care/skill
reasonable time/price
Stages to consider to see if exemption clause is valid?
- Incorporation: Is the exemption clause incorporated into contract?
- Construction: does the exemption clause cover the breach and damage alleged?
- Statutory controls (CRA/UCTA)
Construction: what is the Contra Proferentum rule?
An unclear or ambiguous clause will be construed against the person seeking to rely on it
Construction: can liability for negligence be excluded?
Yes, but clear words are needed to exclude liability for negligence, (word ‘negligence’ need not be used)
Construction: can liability for a very serious or deliberate be excluded?
Yes provided the clause is clearly worded
Which statutes for exemption clauses apply to which contracts?
If contract is trader-consumer: CRA 2015-
If contract isn’t trader consumer: Unfair Contract Terms Act 1977 for breach of SGA 1979 or SGSA 1982
CRA 2015 exemption clauses rules for sales contracts
Term NOT binding to extent it would:
1. Exclude/restrict right/remedy for breach of ss9-11(quality, fit for purpose, as described)
2. Make a right/remedy/its enforcement subject to a restrictive/onerous condition
3. allow a trader to put a person at a disadvantage as a result of pursuing such a right or remedy
4. Exclude/restrict rules of evidence or procedure.
CRA 2015 exemption clauses rules for service contracts
Trader CANT:
1. Exclude/restrict right/remedy for breaches of ss49-52 (reasonable care/skill, reasonable time/price)
2. Make a right/remedy/its enforcement subject to a restrictive/onerous condition
3. Put a person at a disadvantage as a result of pursuing such a right or remedy
What are the provisions of the Unfair Contract Terms Act 1977?
Breach of fits description/satisfactory quality/fit for purpose: valid if reasonable
Negligent breach (reasonable care/skill): CANT exclude for death/PI, other loss valid if reasonable
Breach of express term: if dealing on other parties written standard terms, valid if reasonable
What is the ‘reasonable test’ under UCTA 1977
Exemption clauses must be fair and reasonable, having regard to the circumstances which were/ought reasonably to have been, in the contemplation of the parties when the contract was made.
To determine, CONSIDER…
1. parties relative bargaining power
2. Did consumer receive inducement to agree/have opp to enter similar contract without clause?
3. Know/ought to have known of existence/extent of clause, considering trade custom/prev dealings?
4. Where clause applies to noncompliance-reasonable that compliance would be practicable?
For UCTA reasonableness, what else will the court have regard to (as well as the guidelines)?
→ Defendants resources for meeting liability
→ how far it was open to the defendant to cover itself by insurance.
UCTA: must the whole clause be reasonable?
Yes
BUT if exemption clause can be split into two distinct parts, each part will be judged on its own merit
Can exemption clauses protect 3rd parties?
Generally: cant protect 3rd parties
UNLESS 3rd party is named/identified as a member of class entitled to benefit in clause
